Everybody loves money, particularly spending it! Buying new toys or new clothes which make you look and feel good is important for your confidence and self-esteem. Yet how do you know if you’re good with money or not? Even if you get paid lots of money doesn’t indicate you’re good with it. There are plenty of successful people who have serious issues with money just because they weren’t familiar with the warning signs. Today, it’s paramount to be money conscious so here are 5 signs that you could have issues with money which can subsequently trigger serious financial troubles down the track.
Many of us get complacent with our lifestyles – our car, our home, our jobs – and forget that things can in fact go wrong and everybody needs some financial insulation for rainy days. Without having any savings in the bank, what will protect you from incidents such as hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial hit and you’ll be in a lot of trouble. You’ll have to get a short-term, high interest loan which will just magnify the problem – you can’t save any cash now so how will you repay an extra expense? While it’s easy to ignore, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors recommend having three to six months of living expenses in an emergency fund.
You don’t know where your money goes
Being good with money means that you know when and how much money you receive, and where it goes when you spend it. If you have no idea where your money is being spent, it illustrates a lack of care and respect for your hard-earned cash, and can clearly cause financial issues in the near future. Try making a budget and actively following it. This will aid you in having a greater awareness of your finances so you can realise how much of your money is being squandered on nonessential items. After a month or so, reward yourself for sticking to your budget and you’ll appreciate spending money on yourself a great deal more.
Making minimum repayments only
If you can only manage to make the minimum repayments on your loans, mainly credit cards, then you’re heading for financial problems. It can take years, even decades, to erase a credit card debt by only making minimum repayments. In the meantime, interest fees will be eating away all your prospective savings while you’re virtually just treading water. If this seems familiar, it’s time to make a change and quickly. You should get your priorities right by creating a plan, sticking to a budget, and saving as much money as possible to settle your pending debts.
Spending more than you earn
The clearest sign of money problems is where your spending overtakes your earnings. Regardless of whether you have a comfortable savings account, you must always ensure that your income is greater than your expenses, it’s just simple maths really. If you find yourself in a bad habit of spending too much, it can come to be addictive and lead to even more issues, in addition to likely financial difficulties. Some people attempt to disguise this problem by paying bills with their credit cards which simply makes the issue worse in the long run. Do you even know if your income is greater than your spending? If you’re unsure, it’s probably a good time to find out and make some improvements.
You have new clothes in your wardrobe that you don’t wear
A practical way to assess if you have money problems is to take a look in your wardrobe. Do you have clothes that still have the price tag on them? Everybody loves a sale, and it’s a great way to save money when cash is tight and you need something. But purchasing clothes solely because they’re on sale may signal that you have money troubles. If this is the case, you may additionally be inclined to purchase other items simply because they’re on sale too. Buying unneeded items under the perception that you’re saving money is something that needs to be remedied.
Irrespective of how much you get paid, if you’re not good with money then now is the time to adjust your habits to avoid potential problems in the future. If any of these warning signs sound familiar to you, it may indicate that you have problems with money and should seek advice before it’s too late. All it takes is one financial hit and you’ll be drawn into the financial abyss. To find out what options you have, or to talk to someone about your finances, contact Bankruptcy Experts Rockingham on 1300 795 575 or visit http://www.bankruptcyexpertsrockingham.com.au